China is very pro-business. Business development has been the top priority by the government (well 2nd only to national security). It was getting to the point of too much of it, i.e. environmental issues etc. suffer.

Economic power eventually brings over political might, but China isn't quite there yet.

Honda-D wrote:Leaving all the political crap out. While Honda may not be booted out, they are losing their technology to a partnership they don't own and have control over.

Nothing will stop Guangzhou Honda to take all the technology to start another company to compete in China and abroad. There is no law against these kind of practice.

Heck, even manufacturers are having tough time protecting their parts going from suppliers to competitors.

I don't know where do you guys got those ideas, but all that is far from reality.

1st) Honda owns 50% of the joint venture.

2nd) For sure it's not the parent Chinese company asking for it (otherwise they would have done so in their other joint-ventures), but Honda following this road because they feel it's the best thing. There is nothing to force Honda to do anything for the joint venture.

3rd) As with any joint venture, technology does not belong to the main companies, but to the ventures. Moreover, Honda's IP is protected by patents like any other part of the world. All manufacturers study competition's cars in the deepest detail and learn everything they can, both inside and outside China. They can still not use other people's tech.

Honda-D wrote:Leaving all the political crap out. While Honda may not be booted out, they are losing their technology to a partnership they don't own and have control over.

Nothing will stop Guangzhou Honda to take all the technology to start another company to compete in China and abroad. There is no law against these kind of practice.

Heck, even manufacturers are having tough time protecting their parts going from suppliers to competitors.

I don't know where do you guys got those ideas, but all that is far from reality.

1st) Honda owns 50% of the joint venture.

2nd) For sure it's not the parent Chinese company asking for it (otherwise they would have done so in their other joint-ventures), but Honda following this road because they feel it's the best thing. There is nothing to force Honda to do anything for the joint venture.

3rd) As with any joint venture, technology does not belong to the main companies, but to the ventures. Moreover, Honda's IP is protected by patents like any other part of the world. All manufacturers study competition's cars in the deepest detail and learn everything they can, both inside and outside China. They can still not use other people's tech.

It's not always the government but they sure do turn a blind eye. I've heard of lesser companies setting up joint ventures like hond ahas, only to have majority of the 'partners' departing to set-up their own stuff after the core operating knowledge has been gained. I've heard a story along that line about one of the major powertools company. I'm sure they don't mind doing that with a car.
You'd think companies that work there have sime kinda non-disclosure and non-compete agreement that actually has a enforceable binding power? Next thing you know, someone from china might be making mechanically (not just dimentions but similar material, tolerancing...) interchangeable short blocks or components as a K or R series. Worse yet, one of us could be having stuffs like that, but with lesser quality, installed on your car by a local mechanic.
What most businesses so far have failed at is not realizing how Chinese gov't would turn blind eyes to some blatant IP or tech trade secret violation. You'd figure that from all the pirated dvd's and fake name brand goods...

If things were so pro-capitalist in china, the government would have de-linked their currency and wouldn't force a joint venture such as this for large 'western' firms to do busiesss there.

While we don't know the specifics of Honda's deal, I can guarantee that it is one that has a significant chance of long term harm. While I'm sure there are plenty of ethical Chinese businesses out there, there is also very little protection for foreign businesses. I can't count the number of times that existing businesses here in the US have found the products (that they have patented) they designed and then sent to China for manufacturing suddenly showing up for 1/2 the price elsewhere with no brand name.

One aftermarket parts maker for Hondas whom I've known for awhile told me that he expects to get 3-6 months of strong sales and good prices on a new product before one of the factories he manufactures at in China starts selling his products (sans product markings) to other customers. I asked him why he doesn't manufacture elsewhere and he told me that it wouldn't make much difference, because his costs would double and he'd still be faced with knockoffs in 9-12 months after someone had sent his parts to China to be duplicated anyways.

And it isn't just small businesses either. Garret Turbochargers used to manufacture in China. When they moved on to a different manufacturing locale, we suddenly started seeing exact copies of their turbos, right down to the casting marks, but they didn't have Garret's name on them.

I don't want to paint all Chinese industry with one broad stroke, but there is a serious corruption problem over there, and as a Japanese business especially, I'd be concerned about the future of my assets, both physical and intellectual.

Here's what I'm wondering though... if Honda has set up a separate R&D entity within Guanzhou Honda, presumably one that is more or less independent from Honda of Japan's HQ to begin with (ie. run by Chinese, with presumably Chinese designs and maybe using Honda engines), and the most sophisticated vehicle being made in that plant right now is the Honda Fit, are the risks for IP theft that great? At most, if these Chinese companies relied solely on R&D left from Honda and they split off and formed their own company, surely all they could do is maintain the status quo? Unless there's the fear of actually improving on Honda powertrains?

Plants from automakers like SAIC and Geely have already been modernized after several visits to some of Toyota's facilities (in fact, they got consulting from several people on how to modernize their plants). R&D is something they have done on their own. There really isn't much in the way of manufacturing process that can be "copied" (maybe die-casting and stamping technology, but not much after that); but even in terms of R&D I don't think Honda has much to lose. It is simple: develop for the Chinese market, but keep your newest technologies back home in Japan, or in North America.

Surely Honda, being a relatively conservative company, is aware of the risks? They have had success with joint ventures in the past because of careful management (Jialing, for example, actually paid Honda for the design and use of their venerable SOHC single cylinder air cooled motorcycle engine, and engines being churned out from that factory still use the original Honda die casts, and in vintage bike circles that's the only Chinese company that everyone agrees they can trust for high quality parts), I don't see why this would be any different. By backstabbing a company as large as Honda, wouldn't that have serious repercussions throughout China's automotive industry? I have not actually seen a case where a state-owned joint venture has actually COPIED a manufacturer (all those crappy rip-offs you see are from small independent companies), and there's not much for Guanzhou Honda to actually gain if they were to start a new business making Honda ripoffs.

Yeah, but now you're thinking. They're not, the mentality of some of those people there aren't the same. They're thinking they can make a quick buck and run, or they think they can copy it and do it better or cheaper. (Usually, they can't, as they say the devil is in the details).
Some of my in-laws friends run businesses there and you would not believe what they'll copy/counterfeit there! (They're the victims, not the copiers. They're even Chinese). Leaves me saying WTF???? sometimes.

I'm not saying it'll happen, but I'd be careful of transferring any of my top technology there. No, it's not hearsay. While in a different industry, I've worked with plenty of engineers & companies there. I know guys who work for some very large and well known semiconductor firms there and they confirm that even though it isn't really openly acknowledge, there is always a "special budgets" fund for when you need to grease the wheels, bribe some officials or what not. That's still pretty rampant there.

It seems like you understand very little about China. All your points are valid in western countries, but in China, even when there's law protecting you, the ultimate authority belongs to the government.

A case in point is the China Railway High-Speed (CRH 2), a joint venture between China and Japan. But after the Chinese take away the skills and tech from Shinkansen, they claim that they own all the intellectual rights...

Honda may understand the risk involved, but this is the way to do business in China.

3rd) As with any joint venture, technology does not belong to the main companies, but to the ventures. Moreover, Honda's IP is protected by patents like any other part of the world. All manufacturers study competition's cars in the deepest detail and learn everything they can, both inside and outside China. They can still not use other people's tech

Patent protection in China? You must be joking. China has a long way to go regarding intellectual property protection. Go to any city in China (and much of Asia) and you find illegal copies and knock-offs everywhere. Identical looking Apple IPODS, DVDs, Software, it can be almost any massed produced object. Here is a link to an article about some of stuff that has been going on regarding cars: http://www.chinadaily.com.cn/english/doc/2004-12/18/content_401235.htmThis is not China bashing. My company gets a lot of good quality components from there but we will not send them critical components or allow them to build final product for us because it would only be a matter of time before they would be selling the product themselves. This is a real concern.

Piracy of copyrights is an endemic problem across ALL industries in China.

In the audio industry, I recently ran into a small manufacturer in Seattle that does 99% of the production in China, but then they install their proprietary parts and do final fine tuning in Seattle.

There are knock offs of their product out there but they sound like crap - on purpose.

Boeing, also, has shipped work to China. We'll see what happens with that deal.

And, Wind River Systems, makers of the very popular Real Time OS vxWorks told me an interesting story. Turns out they had a support call from an engineer in China about some stuff in vx5.4. As they researched it, they found out that there were over 4000 engineers using the same seat license.

Now, THAT was incredible. You're talking about eight figures of stolen Intellectual Property and how many more millions on hardware that got sold without the proper license fee.

3rd) As with any joint venture, technology does not belong to the main companies, but to the ventures. Moreover, Honda's IP is protected by patents like any other part of the world. All manufacturers study competition's cars in the deepest detail and learn everything they can, both inside and outside China. They can still not use other people's tech

Patent protection in China? You must be joking. China has a long way to go regarding intellectual property protection. Go to any city in China (and much of Asia) and you find illegal copies and knock-offs everywhere. Identical looking Apple IPODS, DVDs, Software, it can be almost any massed produced object. Here is a link to an article about some of stuff that has been going on regarding cars: http://www.chinadaily.com.cn/english/doc/2004-12/18/content_401235.htmThis is not China bashing. My company gets a lot of good quality components from there but we will not send them critical components or allow them to build final product for us because it would only be a matter of time before they would be selling the product themselves. This is a real concern.

It's not the same thing to protect international patents in China's domestic market (= impossible) than to protect China's own companies IP inside China. The patent system is essential to any business development in any country, and China is not an exception.

One thing is that China's government won't fight against local companies copying or infringing international patents for the internal market (and their industry's development), another very different thing is them not protecting their own companies patents in their own market, which is what we are talking about, and I'm pretty sure they are taking good car of it.

80honda wrote:After this venture is running smoothly and making money, I predict the government will boot Honda out.

The article only talks about a proprietary brand; there's no mention of any proprietary technology or process involved. Since the Chinese are already making cars just fine on their own, I don't see anything here that can be ripped off. Honda isn't stupid, they're very well aware of all the dangers in doing business in China, so I'm sure they're not going into this venture blind or unprotected.

And China isn't Venezuela where foreign companies get nationalized and booted out.

Honda-D wrote:Leaving all the political crap out. While Honda may not be booted out, they are losing their technology to a partnership they don't own and have control over.

Nothing will stop Guangzhou Honda to take all the technology to start another company to compete in China and abroad. There is no law against these kind of practice.

Heck, even manufacturers are having tough time protecting their parts going from suppliers to competitors.

I don't know where do you guys got those ideas, but all that is far from reality.

1st) Honda owns 50% of the joint venture.

2nd) For sure it's not the parent Chinese company asking for it (otherwise they would have done so in their other joint-ventures), but Honda following this road because they feel it's the best thing. There is nothing to force Honda to do anything for the joint venture.

3rd) As with any joint venture, technology does not belong to the main companies, but to the ventures. Moreover, Honda's IP is protected by patents like any other part of the world. All manufacturers study competition's cars in the deepest detail and learn everything they can, both inside and outside China. They can still not use other people's tech.

Actually I did a business case on Shanghai Volkswagen (which is 50/50 owned by VW and I believe Dongfang IIRC) and all foreign car makers who wish to sell in China have to partner (max 50%) with a Chinese automaker...

Chinese r the best in copying ideas and making $ out of it. They can do it cheaper and faster, and hence making more $ in the end. Honda is to their best interest to keep all of their top technology away from the Chinese.

There is nothing wrong in copying an idea and making it into an even better product/technology, the Japanese r great at doing that for years. But the problem with the Chinese is that they r pretty low on the creativity meter, but real high on making lots of quick bucks without putting in alot of hard worrk.

from the article:
While reading this article about how super-low priced Chinese SUVs have cut into the low priced Jeep Cherokee 2500 in China, it's impossible not to notice that the Shuanghuan S-RV is a Honda CRV. The company even went out of their way to name it to remind everyone that they stole the design. I decided to do some investigating on the subject.

At least I found that Honda (and Audi, since the S-RV used two of the rings on an Audi grille as the symbol) had sued Shuanghuan for the blatant rip-off. Upon further research, it looks as though no company that has sued a Chinese automaker for intellectual property rights has won a case. Chinese automakers are stealing the popular designs, teaming it up with old powertrains and cheap interiors and selling them for thousands less than the originals. Is it any wonder why the �Chery� name looks so much like �Chevy�? How�s that Pradda bag of yours holding up?